./uploads/advanced-cache.php UK Regulator Blocks Microsoft’s $69 Billion Acquisition of Activision

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UK Regulator Blocks Microsoft’s $69 Billion Acquisition of Activision

The United Kingdom's Competition and Markets Authority has prohibited Microsoft's proposed $69 billion acquisition of Activision Blizzard, citing concerns about a substantial lessening of competition in the supply of cloud-gaming services in the UK

Microsoft

The long-awaited final report from the United Kingdom’s Competition and Markets Authority (CMA) has put a stop to Microsoft’s proposed $69 billion acquisition of Activision, citing that it would result in a substantial lessening of competition (SLC) in the supply of cloud-gaming services in the UK. The regulator noted Microsoft’s strong position in the cloud-gaming sector, estimating a market share of 60 to 70 percent, making it already much stronger than its rivals. The CMA believes that after purchasing Activision, Microsoft would make Activision’s titles exclusive to its cloud-gaming service for commercial benefit.

Despite Microsoft’s recent deals with Nvidia and smaller cloud-gaming providers, the CMA believes these deals were limited and not sufficient to address the regulator’s concerns. Furthermore, the CMA stated that Microsoft’s proposed standardized cloud-gaming licensing terms would prevent deals from being determined by the dynamism and creativity of competition in the market.

The CMA is convinced that Microsoft’s acquisition of the Call of Duty franchise would not substantially reduce competition in the wider console gaming market, and Microsoft would not find it financially beneficial to make Call of Duty exclusive to Xbox after the merger. The regulator believes that providing a worse version on PlayStation would not materially harm PlayStation’s ability to compete.

The CMA’s decision would provide severe restrictions on how the combined company could operate in the UK, worth just over 7 billion pounds (~$8.7 billion). Regulators in Brazil, Japan, and South Africa have already approved the deal, and the European Union is expected to approve the deal in the coming weeks. An FTC lawsuit aiming to block the deal is set to have its first evidentiary hearing in August.

Microsoft and Activision Blizzard are committed to appealing the CMA’s decision, with Microsoft’s Vice Chair and President Brad Smith saying that the decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK. Activision Blizzard’s Joe Christinat said that the report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects.

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